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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-QSB

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

|For Quarter Ended:
December 31, 2000 |  |  |  | Commission File Number:
0 - 19957
|------------------------------------ |  |  |  | ---------------------------------

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Quantech Ltd.(Exact name of small business issuer as specified in its charter)

Minnesota(State or other jurisdiction
of incorporation or organization)

41-1709417(I.R.S. Employer identification No.)


815 Northwest Parkway, Suite 100
Eagan, MN 55121(Address of principal executive offices) (Zip code)

(651)-647-6370(Issuer's telephone number, including area code)

(Former
name, former address and former fiscal year, if changed since last report)

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Check
whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. YES /x/  NO / /

State
the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: 18,648,112 shares of Common Stock, no par value, as of
February 6, 2001.

Transitional
Small Business Disclosure Format: YES / /  NO /x/

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Index

|                              |                                                                   | Page No.                                                                                                                                          
|----------------------------- | ----------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|PART I. FINANCIAL INFORMATION |                                                                   |                                                                                                                                                   
|                              | Item 1: Financial Statements:                                     |                                                                                                                                                   
|                              |                                                                   | Consolidated Balance Sheets as of December 31, 2000 and June 30, 2000                                                                             
|                              |                                                                   | Consolidated Statements of Operations for the Three Months and Six Months Ended December 31, 2000 and 1999 and from inception to December 31, 2000
|                              |                                                                   | Consolidated Statement of Stockholders' Equity from inception to December 31, 2000                                                                
|                              |                                                                   | Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 and 1999 and from inception to December 31, 2000                 
|                              |                                                                   | Notes to Financial Statements                                                                                                                     
|                              | Item 2: Management's Discussion and Analysis or Plan of Operation |                                                                                                                                                   
|PART II. OTHER INFORMATION    |                                                                   | 18                                                                                                                                                

2

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QUANTECH LTD.        (A Development Stage Company)        CONSOLIDATED BALANCE SHEET

|                                                     |                                                                                                                                                       | December 31,
2000    |           | June 30,
2000 |        
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | --------- | ------------- | -------
|
|ASSETS                                               |                                                                                                                                                      
|CURRENT ASSETS                                       |                                                                                                                                                       |                      |           |               |        
|                                                     | Cash and cash equivalents                                                                                                                             |                      | $         | 2,022,888     |        
|                                                     | 8% demand note receivable from officer                                                                                                                |                      |           | 148,440       |        
|                                                     | Prepaid expenses                                                                                                                                      |                      |           | 50,109        |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|Total current assets                                 |                                                                                                                                                       |                      | 2,221,437 |               |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|PROPERTY AND EQUIPMENT                               |                                                                                                                                                       |                      |           |               |        
|                                                     | Equipment                                                                                                                                             |                      |           | 1,912,364     |        
|                                                     | Leasehold improvements                                                                                                                                |                      |           | 68,494        |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|                                                     |                                                                                                                                                       |                      |           | 1,980,858     |        
|                                                     | Less accumulated depreciation                                                                                                                         |                      |           | (350,109      | )      
|                                                     |                                                                                                                                                       |                      |           |               |        
|Total equipment                                      |                                                                                                                                                       |                      | 1,630,749 |               |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|OTHER ASSETS                                         |                                                                                                                                                       |                      |           |               |        
|                                                     | License agreement, at cost, less amortization                                                                                                         |                      |           | 1,919,238     |        
|                                                     | Patents                                                                                                                                               |                      |           | 80,404        |        
|                                                     | Deposits                                                                                                                                              |                      |           | 100,919       |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|Total other assets                                   |                                                                                                                                                       |                      | 2,100,561 |               |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|TOTAL ASSETS                                         |                                                                                                                                                       | $                    | 5,952,747 |               | $      
|                                                     |                                                                                                                                                       |                      |           |               |        
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       |                                                                                                                                                      
|CURRENT LIABILITIES                                  |                                                                                                                                                       |                      |           |               |        
|                                                     | Short term debt                                                                                                                                       |                      | $         |              |        
|                                                     | Current portion of long-term debt                                                                                                                     |                      |           | 64,316        |        
|                                                     | Accounts payable                                                                                                                                      |                      |           | 706,319       |        
|                                                     | Accrued expenses:                                                                                                                                     |                      |           |               |        
|                                                     |                                                                                                                                                       | Interest             |           |               |       
|                                                     |                                                                                                                                                       | Payroll and vacation |           |               | 138,763
|                                                     |                                                                                                                                                       |                      |           |               |        
|Total current liabilities                            |                                                                                                                                                       |                      | 909,398   |               |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|LONG TERM LIABILITIES                                |                                                                                                                                                       |                      |           |               |        
|                                                     | Long term debt, net of current portion                                                                                                                |                      |           | 12,127        |        
|MINORITY INTEREST IN SUBSIDIARY                      |                                                                                                                                                       |                      | 143,282   |               |        
|REDEEMABLE PREFERRED STOCK (see note 3)              |                                                                                                                                                       |                      |          |               |        
|STOCKHOLDERS' EQUITY (DEFICIT)                       |                                                                                                                                                       |                      |           |               |        
|                                                     | Series B Preferred Stock (see note 3)                                                                                                                 |                      |           |              |        
|                                                     | Series C Preferred Stock (see note 3)                                                                                                                 |                      |           |              |        
|                                                     | Common stock, no par value; authorized 59,913,000 outstanding 18,648,112 shares and 6,204,416 shares December 31, 2000 and June 30, 2000 respectively |                      |           | 33,640,786    |        
|                                                     | Subscriptions receivable                                                                                                                              |                      |           | (181,000      | )      
|                                                     | Additional paid-in capital                                                                                                                            |                      |           | 11,134,665    |        
|                                                     | Deficit accumulated during the development stage                                                                                                      |                      |           | (39,706,511   | )      
|                                                     |                                                                                                                                                       |                      |           |               |        
|Total stockholders' equity (deficit)                 |                                                                                                                                                       |                      | 4,887,940 |               |        
|                                                     |                                                                                                                                                       |                      |           |               |        
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |                                                                                                                                                       | $                    | 5,952,747 |               | $      
|                                                     |                                                                                                                                                       |                      |           |               |        

3

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QUANTECH LTD.        (A Development Stage Company)        CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED

|                                              |                                                  | Six Months
Ended
December 31,
2000 |            | Six Months
Ended
December 31,
1999 |   | Period From
September 30,
1991 (Date of
Inception), to
December 31,
2000 |           
|--------------------------------------------- | ------------------------------------------------ | ---------------------------------- | ---------- | ---------------------------------- | - | ------------------------------------------------------------------------ | ----------
|Net Sales                                     |                                                  | $                                  | 40,000     |                                    | $ |                                                                         |           
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Expenses:                                     |                                                  |                                    |            |                                    |   |                                                                          |           
|                                              | General and administrative                       |                                    |            | 1,254,287                          |   |                                                                          | 765,507   
|                                              | Marketing                                        |                                    |            | 475,796                            |   |                                                                          | 558,709   
|                                              | Research and development                         |                                    |            | 3,814,325                          |   |                                                                          | 1,231,217 
|                                              | Minimum royalty expense                          |                                    |            |                                   |   |                                                                          | 75,000    
|                                              | Other                                            |                                    |            |                                   |   |                                                                          |          
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Total expenses                                |                                                  |                                    | 5,544,408  |                                    |   | 2,630,433                                                                |           
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Loss from operations                          |                                                  |                                    | (5,504,408 | )                                  |   | (2,630,433                                                               | )         
|Other:                                        |                                                  |                                    |            |                                    |   |                                                                          |           
|                                              | Interest income                                  |                                    |            | 80,869                             |   |                                                                          | 1,810     
|                                              | Interest expense                                 |                                    |            | (23,980                            | ) |                                                                          | (25,776   
|                                              | Minority interest                                |                                    |            | 230,153                            |   |                                                                          |          
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Loss before income taxes                      |                                                  |                                    | (5,217,366 | )                                  |   | (2,654,399                                                               | )         
|Income taxes                                  |                                                  |                                    |           |                                    |   |                                                                         |           
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Net loss                                      |                                                  | $                                  | (5,217,366 | )                                  | $ | (2,654,399                                                               | )         
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Net loss attributable to common shareholders: |                                                  |                                    |            |                                    |   |                                                                          |           
|                                              | Net loss                                         |                                    | $          | (5,217,366                         | ) | $                                                                        | (2,654,399
|                                              | Preferred stock accretion                        |                                    |            | (118,249                           | ) |                                                                          | (263,103  
|                                              | Beneficial conversion feature of preferred stock |                                    |            | (2,470,644                         | ) |                                                                          | (439,850  
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Net loss attributable to common shareholders  |                                                  | $                                  | (7,806,259 | )                                  | $ | (3,357,352                                                               | )         
|                                              |                                                  |                                    |            |                                    |   |                                                                          |           
|Loss per basic and diluted common share       |                                                  | $                                  | (0.64      | )                                  | $ | (1.04                                                                    | )         
|Weighted average common shares outstanding    |                                                  |                                    | 12,233,548 |                                    |   | 3,228,137                                                                |           

4

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QUANTECH LTD.        (A Development Stage Company)        CONSOLIDATED STATEMENTS OF OPERATIONSUNAUDITED

|                                              |                                                  | Three Months
Ended
December 31,
2000 |            | Three Months
Ended
December 31,
1999 |  
|--------------------------------------------- | ------------------------------------------------ | ------------------------------------ | ---------- | ------------------------------------ | -
|Net Sales                                     |                                                  | $                                    |           |                                      | $
|Expenses:                                     |                                                  |                                      |            |                                      |  
|                                              | General and administrative                       |                                      |            | 619,552                              |  
|                                              | Marketing                                        |                                      |            | 278,643                              |  
|                                              | Research and development                         |                                      |            | 2,443,682                            |  
|                                              | Minimum royalty expense                          |                                      |            |                                     |  
|                                              | Other                                            |                                      |            |                                     |  
|                                              |                                                  |                                      |            |                                      |  
|Total expenses                                |                                                  |                                      | 3,341,877  |                                      |  
|                                              |                                                  |                                      |            |                                      |  
|Loss from operations                          |                                                  |                                      | (3,341,877 | )                                    |  
|Other:                                        |                                                  |                                      |            |                                      |  
|                                              | Interest income                                  |                                      |            | 51,920                               |  
|                                              | Interest expense                                 |                                      |            | (4,754                               | )
|                                              | Minority interest                                |                                      |            | 147,160                              |  
|                                              |                                                  |                                      |            |                                      |  
|Loss before income taxes                      |                                                  |                                      | (3,147,551 | )                                    |  
|Income taxes                                  |                                                  |                                      |           |                                      |  
|                                              |                                                  |                                      |            |                                      |  
|Net loss                                      |                                                  | $                                    | (3,147,551 | )                                    | $
|                                              |                                                  |                                      |            |                                      |  
|Net loss attributable to common shareholders: |                                                  |                                      |            |                                      |  
|                                              | Net loss                                         |                                      | $          | (3,147,551                           | )
|                                              | Preferred stock accretion                        |                                      |            |                                     |  
|                                              | Beneficial conversion feature of preferred stock |                                      |            | (698,740                             | )
|                                              |                                                  |                                      |            |                                      |  
|Net loss attributable to common shareholders  |                                                  | $                                    | (3,846,291 | )                                    | $
|                                              |                                                  |                                      |            |                                      |  
|Loss per basic and diluted common share       |                                                  | $                                    | (0.21      | )                                    | $
|Weighted average common shares outstanding    |                                                  |                                      | 18,223,573 |                                      |  

5

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QUANTECH LTD  (A Development Stage Company)  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY  Period From September 30, 1991 (date of Inception), to December 31, 2000

|                           |                                                         | Series B
Preferred Stock |  | Series C
Preferred Stock |   | Series D
Preferred Stock |   |  |   |   |  |   |  | Deficit
Accumulated
During the
Development
Stage |   |  |           |         |         |           |            |         |           
|-------------------------- | ------------------------------------------------------- | ------------------------ |  | ------------------------ | - | ------------------------ | - |  | - | - |  | - |  | ------------------------------------------------ | - |  | --------- | ------- | ------- | --------- | ---------- | ------- | ----------
|
|
|
|Balance at Inception       |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Net Loss for 15 months                                  |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock transactions:                              |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock issued, October 1991                       |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 160,000 |         | $         | 3,154,574  |         |           
|                           | Common stock issued, November 1991                      |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 30,000  |         | $         | 611,746    |         | $         
|                           | Common stock issuance costs                             |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         | $         
|                           | Cumulative translation adjustment                       |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock issued, September 1992                     |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 35,000  |         | $         | 699,033    |         | $         
|                           | Common stock issuance costs                             |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         | $         
|                           | Common stock to be issued                               |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Cumulative translation adjustment                       |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Elimination of cumulative translation adjustment        |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Officers advances, net                                  |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|Balance, December 31, 1992 |                                                         | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 225,000   |         | $       | 4,465,353 |            | $       | 1,461,617 
|                           | Net loss                                                |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock transactions:                              |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock issued, January 1993                       |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 8,000   |         | $         | 1,600      |         | $         
|                           | Common stock issued, April 1993                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 1,500   |         | $         | 300        |         | $         
|                           | Change in common stock par value resulting from merger  |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         | $         | (4,420,353 | )       | $         
|                           | Repayments                                              |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|Balance,June 30, 1993      |                                                         | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 234,500   |         | $       | 46,900    |            | $       | 6,012,070 
|                           | Net loss                                                |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | 240,000 shares of common stock to be issued             |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Repayments                                              |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|Balance, June 30, 1994     |                                                         | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 234,500   |         | $       | 46,900    |            | $       | 6,012,070 
|                           | Net loss                                                |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock issued, June 1995                          |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 107,500 |         | $         | 21,500     |         | $         
|                           | Warrants issued for services                            |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         | $         
|                           |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|Balance June 30, 1995      |                                                         | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 342,000   |         | $       | 68,400    |            | $       | 6,328,338 
|                           | Net loss                                                |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           | Common stock issued, net of issuance costs of $848,877: |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|                           |                                                         | July, 1995               |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 308,000 |           | $          | 61,600  |           
|                           |                                                         | August, 1995             |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 35,880  |           | $          | 7,176   |           
|                           |                                                         | September, 1995          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 690,364 |           | $          | 138,073 |           
|                           |                                                         | November, 1995           |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 94,892  |           | $          | 18,978  |           
|                           |                                                         | December, 1995           |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 560,857 |           | $          | 112,172 |           
|                           |                                                         | May, 1996                |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 313,750 |           | $          | 62,750  |           
|                           |                                                         | June, 1996               |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         | 252     |           | $          | 51      |           
|                           | Payments received on subscription receivable            |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | (960    | )       |           | (192       | )       | $         
|                           | Compensation expense recorded on stock options          |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         | $         
|                           |                                                         |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |         |         |           |            |         |           
|Balance, June 30, 1996     |                                                         | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 2,345,035 |         | $       | 469,008   |            | $       | 15,296,856

6

---

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

|                       |                                                                     | Series B
Preferred Stock |  | Series C
Preferred Stock |   | Series D
Preferred Stock |   |  |   |   |  |   |  | Deficit
Accumulated
During the
Development
Stage |   |  |           |        |         |            |            |        
|---------------------- | ------------------------------------------------------------------- | ------------------------ |  | ------------------------ | - | ------------------------ | - |  | - | - |  | - |  | ------------------------------------------------ | - |  | --------- | ------ | ------- | ---------- | ---------- | -------
|
|
|
|                       | Net loss                                                            |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Stock offering costs                                                |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Common stock issued upon exercise of options and warrants           |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     | September 1996           |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 500     |            | $          | 100    
|                       |                                                                     | October 1996             |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 8,500   |            | $          | 1,700  
|                       |                                                                     | November 1996            |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 750     |            | $          | 150    
|                       |                                                                     | December 1996            |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 13,500  |            | $          | 2,700  
|                       |                                                                     | January 1997             |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 1,000   |            | $          | 200    
|                       |                                                                     | February 1997            |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 7,500   |            | $          | 1,500  
|                       |                                                                     | March 1997               |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 7,000   |            | $          | 1,400  
|                       | Payments received on subscription receivable                        |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Compensation expense recorded on stock options                      |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Common stock issued, June 1997                                      |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 18,250 |         | $          | 3,650      |        
|                       | Warrants issued with notes payable                                  |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|Balance, June 30, 1997 |                                                                     | 0                        |  | $                        | 0 |                          | 0 |  | $ | 0 |  | 0 |  | $                                                | 0 |  | 2,402,035 |        | $       | 480,408    |            | $      
|                       | Net Loss                                                            |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Conversion of common stock from par value to no par value           |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         | $          | 15,392,446 |        
|                       | Common stock issued for license agreement:                          |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     | September 1997           |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        | 150,000 |            | $          | 390,000
|                       | Common stock issued for equipment and services received: March 1998 |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | 13,078 |         | $          | 45,584     |        
|                       | Warrants issued for services received:                              |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     | March 1998               |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     | April 1998               |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Warrants issued with notes payable                                  |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Amount attributable to value of debt conversion feature             |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Warrants issued for license agreement                               |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       |                                                                     | December 1997            |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Compensation expense recorded on stock options                      |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|                       | Adjustment of fractional shares due to 1-for 20 reverse stock split |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           | (73    | )       |            |            |        
|                       |                                                                     |                          |  |                          |   |                          |   |  |   |   |  |   |  |                                                  |   |  |           |        |         |            |            |        
|Balance, June 30, 1998 |                                                                     | 0                        |  | $                        | 0 |                          |   |  |   |   |  |   |  |                                                  |   |  | 2,565,040 |        | $       | 16,308,438 |            | $      

7

---

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

|                       |                                                          | Series B
Preferred Stock           |  | Series C
Preferred Stock |         | Series D
Preferred Stock |         |  |           |   |   |         |  | Deficit
Accumulated
During the
Development
Stage |   |  |           |         |        |            |         |       
|---------------------- | -------------------------------------------------------- | ---------------------------------- |  | ------------------------ | ------- | ------------------------ | ------- |  | --------- | - | - | ------- |  | ------------------------------------------------ | - |  | --------- | ------- | ------ | ---------- | ------- | ------
|
|
|
|                       | Net Loss                                                 |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Warrants issued with notes payable                       |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Common stock issued upon conversion of notes payable:    |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | July 1998                          |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 2,000  |            | $       | 7,060 
|                       |                                                          | September 1998                     |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 3,400  |            | $       | 12,002
|                       |                                                          | October 1998                       |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 25,000 |            | $       | 18,750
|                       | Common stock issued upon exercise of warrant:            |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | August 1998                        |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 2,045  |            | $       | 5,114 
|                       | Common stock issued for equipment and services received: |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | July 1998                          |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 5,714  |            | $       | 20,000
|                       |                                                          | August 1998                        |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 9,196  |            | $       | 27,589
|                       |                                                          | September 1998                     |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 12,557 |            | $       | 11,318
|                       |                                                          | December 1998                      |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 6,078  |            | $       | 5,688 
|                       | Stock options issued for services:                       |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | October 1998                       |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Compensation expense recorded on stock options           |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Common stock issued upon conversion of preferred stock:  |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | November 1998                      |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 74,052 |            | $       | 55,539
|                       |                                                          | January 1999                       |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 15,952 |            | $       | 11,964
|                       |                                                          | March 1999                         |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 500    |            | $       | 375   
|                       |                                                          | April 1999                         |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         | 20,000 |            | $       | 15,000
|                       | Warrants issued for services:                            |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | November 1998                      |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Series B Preferred Stock issued:                         |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | June 1999                          |  | 623,334                  |         | $                        | 891,500 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Accrete to redemption value on Series A Preferred Stock  |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|Balance, June 30, 1999 |                                                          | 623,334                            |  | $                        | 891,500 |                          | 0       |  | $         | 0 |   | 0       |  | $                                                | 0 |  | 2,741,534 |         | $      | 16,498,837 |         | $     
|                       | Net Loss                                                 |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Series B Preferred Stock issued:                         |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | July 1999                          |  | 216,666                  |         | $                        | 291,829 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | August 1999                        |  | 86,667                   |         | $                        | 116,989 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | September 1999                     |  | 16,667                   |         | $                        | 22,500  |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | October 1999adjust price to $1.00 |  | 471,666                  |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | November 1999                      |  | 100,000                  |         | $                        | 100,000 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | December 1999                      |  | 480,000                  |         | $                        | 472,500 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | January 2000                       |  | 600,000                  |         | $                        | 425,500 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | February 2000                      |  | 1,318,000                |         | $                        | 732,755 |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Beneficial conversion expense on Preferred Stock         |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       | Series C Preferred Stock issued:                         |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           |         |        |            |         |       
|                       |                                                          | February 2000                      |  |                          |         |                          |         |  | 1,000,000 |   | $ | 973,100 |  |                                                  |   |  |           |         |        |            |         |       
|                       | Common stock issued: February 2000                       |                                    |  |                          |         |                          |         |  |           |   |   |         |  |                                                  |   |  |           | 125,000 |        | $          | 187,500 |       

8

---

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

|                      |                                                          |                |  |          |           | Series C
Preferred Stock |           | Series D
Preferred Stock |   |         |  |   |  |   |   | Deficit
Accumulated
During the
Development
Stage |           |  |         |            |   |         |           |          
|--------------------- | -------------------------------------------------------- | -------------- |  | -------- | --------- | ------------------------ | --------- | ------------------------ | - | ------- |  | - |  | - | - | ------------------------------------------------ | --------- |  | ------- | ---------- | - | ------- | --------- | ---------
|
|
|
|                      | Common stock issued upon conversion of preferred stock:  |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          | July 1999      |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 32,000  |            | $ | 24,000  |           |          
|                      |                                                          | August 1999    |  | (33,333  | )         | $                        | (50,000   | )                        |   |         |  |   |  |   |   |                                                  |           |  | 179,121 |            | $ | 159,341 |           |          
|                      |                                                          | September 1999 |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 80,852  |            | $ | 60,639  |           |          
|                      |                                                          | October 1999   |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 50,000  |            | $ | 37,500  |           |          
|                      |                                                          | December 1999  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 13,252  |            | $ | 9,939   |           |          
|                      |                                                          | January 2000   |  | (880,000 | )         | $                        | (880,000  | )                        |   |         |  |   |  |   |   |                                                  |           |  | 890,000 |            | $ | 887,500 |           |          
|                      |                                                          | February 2000  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 866,664 |            | $ | 649,998 |           |          
|                      |                                                          | March 2000     |  | (75,000  | )         | $                        | (72,500   | )                        |   |         |  |   |  |   |   |                                                  |           |  | 89,000  |            | $ | 83,000  |           |          
|                      |                                                          | April 2000     |  | (180,000 | )         | $                        | (177,000  | )                        |   |         |  |   |  |   |   |                                                  |           |  | 226,880 |            | $ | 212,160 |           |          
|                      |                                                          | May 2000       |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 68,864  |            | $ | 51,648  |           |          
|                      |                                                          | June 2000      |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 42,824  |            | $ | 32,118  |           |          
|                      | Common stock issued upon exercise of warrants:           |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          | September 1999 |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 454,545 |            | $ | 500,000 |           |          
|                      |                                                          | February 2000  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 24,256  |            | $ | 18,192  |           |          
|                      |                                                          | March 2000     |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 60,263  |            | $ | 147,835 |           |          
|                      |                                                          | May 2000       |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 39,708  |            | $ | 67,318  |           |          
|                      |                                                          | June 2000      |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 7,321   |            | $ | 7,553   |           |          
|                      | Warrants issued:                                         |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          | September 1999 |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           | $        
|                      |                                                          | November 1999  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           | $        
|                      |                                                          | January 2000   |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           | $        
|                      |                                                          | February 2000  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           | $        
|                      |                                                          | March 2000     |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           | $        
|                      | Common stock issued upon exercise of options:            |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          | January 2000   |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 2,000   |            | $ | 2,750   |           |          
|                      |                                                          | February 2000  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 200     |            | $ | 226     |           |          
|                      |                                                          | June 2000      |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 7,001   |            | $ | 8,751   |           |          
|                      | Common stock issued for equipment and services received: |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          | January 2000   |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 2,275   |            | $ | 2,276   |           |          
|                      |                                                          | February 2000  |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  | 200,856 |            | $ | 310,684 |           |          
|                      | Compensation expense recorded on stock options           |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         | $         | 332,300  
|                      | Subsidiary stock issued                                  |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         | $         | 1,250,088
|                      | Payment received on subscriptions receivable             |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      | Accrete to redemption value on Series A Preferred Stock  |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|                      |                                                          |                |  |          |           |                          |           |                          |   |         |  |   |  |   |   |                                                  |           |  |         |            |   |         |           |          
|Balance June 30, 2000 |                                                          | 2,744,667      |  | $        | 1,874,073 |                          | 1,000,000 |                          | $ | 973,100 |  | 0 |  | $ | 0 |                                                  | 6,204,416 |  | $       | 19,959,765 |   | $       | 7,313,828 |          

9

---

QUANTECH LTD
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Period From September 30, 1991 (date of Inception), to December 31, 2000

|                          |                                                         |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            | Deficit
Accumulated
During the
Development
Stage |     |            |            |           |         |             |            |  
|------------------------- | ------------------------------------------------------- | -------------- |  | ---------- | - | - | ---------- | - | ---------- | - | - | -------- | - | ---------- | - | - | ---------- | ----- | ---------- | ------------------------------------------------ | --- | ---------- | ---------- | --------- | ------- | ----------- | ---------- | -
|
|
|
|                          | Net Loss                                                |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         | $           | (5,217,366 | )
|                          | Series D Preferred Stock issued:                        |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | August 2000    |  |            |   |   |            |   |            |   |   |          |   | 1,462,400  |   | $ | 2,817,482  |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | September 2000 |  |            |   |   |            |   |            |   |   |          |   | 533,600    |   | $ | 1,123,817  |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | October 2000   |  |            |   |   |            |   |            |   |   |          |   | 998,200    |   | $ | 1,774,840  |       |            |                                                  |     |            |            |           |         |             |            |  
|                          | Common stock issued upon conversion of preferred stock: |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | August 2000    |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       | 14,108     |                                                  | $   | 10,581     |            |           |         |             |            |  
|                          |                                                         | September 2000 |  | (25,000    | ) | $ | (22,500    | ) |            |   |   |          |   |            |   |   |            |       | 25,000     |                                                  | $   | 22,500     |            |           |         |             |            |  
|                          |                                                         | October 2000   |  | (2,719,667 | ) | $ | (1,851,573 | ) | (1,000,000 | ) | $ | (973,100 | ) | (2,994,200 | ) | $ | (5,716,139 | )     | 12,119,463 |                                                  | $   | 13,143,725 |            |           |         |             |            |  
|                          | Warrants issued:                                        |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | August 2000    |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            | $         | 576,000 |             |            |  
|                          |                                                         | September 2000 |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            | $         | 206,000 |             |            |  
|                          |                                                         | October 2000   |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            | $         | 401,868 |             |            |  
|                          |                                                         | November 2000  |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            | $         | 34,225  |             |            |  
|                          |                                                         | December 2000  |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            | $         | 40,850  |             |            |  
|                          | Subsidiary stock issued                                 |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            | $          | 91,250    |         |             |            |  
|                          | Common stock issued:                                    |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         |             |            |  
|                          |                                                         | October 2000   |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       | 56,000     |                                                  | $   | 65,371     |            |           |         |             |            |  
|                          |                                                         | November 2000  |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       | 178,000    |                                                  | $   | 366,300    |            |           |         |             |            |  
|                          |                                                         | December 2000  |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       | 50,000     |                                                  | $   | 71,700     |            |           |         |             |            |  
|                          | Common stock issued upon exercise of warrants:          |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            | 1,125 |            | $                                                | 844 |            |            |           |         |             |            |  
|                          | Beneficial conversion expense on Preferred Stock        |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            | $          | 2,470,644 |         | $           | (2,470,644 | )
|                          | Accrete to redemption value on Series A Preferred Stock |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         | $           | (118,249   | )
|                          |                                                         |                |  |            |   |   |            |   |            |   |   |          |   |            |   |   |            |       |            |                                                  |     |            |            |           |         |             |            |  
|Balance December 31, 2000 |                                                         | 0              |  | $          | 0 |   | 0          |   | $          | 0 |   | 0        |   | $          | 0 |   | 18,648,112 |       | $          | 33,640,786                                       |     | $          | 11,134,665 |           | $       | (39,706,511 | )          | $

10

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QUANTECH LTD        (A Development Stage Company)        CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                        |                                                                                   | Six Months
Ended
December 31,
2000               |                                         | Six Months
Ended
December 31,
1999        |          | Period From
September 30,
1991 (Date of
Inception), to
December 31,
2000 |           
|--------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------ | --------------------------------------- | ----------------------------------------- | -------- | ------------------------------------------------------------------------ | ----------
|Cash Flows From Operating Activities    |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        | Net Loss                                                                          |                                                  | $                                       | (5,217,366                                | )        | $                                                                        | (2,654,399
|                                        | Adjustments to reconcile net loss to net cash used in operating activities:       |                                                  |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   | Elimination of cumulative translation adjustment |                                         |                                           |         |                                                                          |           
|                                        |                                                                                   | Depreciation                                     |                                         |                                           | 72,021   |                                                                          |           
|                                        |                                                                                   | Amortization                                     |                                         |                                           | 163,315  |                                                                          |           
|                                        |                                                                                   | Noncash compensation, services and interest      |                                         |                                           |         |                                                                          |           
|                                        |                                                                                   | Minority interest                                |                                         |                                           | (230,153 | )                                                                        |           
|                                        |                                                                                   | Other                                            |                                         |                                           |         |                                                                          |           
|                                        |                                                                                   | Change in assets and liabilities:                |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   |                                                  | (Increase) decrease in prepaid expenses |                                           |          | (5,848                                                                   | )         
|                                        |                                                                                   |                                                  | Increase (decrease) in accounts payable |                                           |          | 91,727                                                                   |           
|                                        |                                                                                   |                                                  | Increase (decrease) in accrued expenses |                                           |          | (3,750                                                                   | )         
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   |                                                  |                                         | Net cash used in operating activities     |          |                                                                          | (5,130,054
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|Cash Flows From Investing Activities    |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        | Purchase of property and equipment                                                |                                                  |                                         | (758,326                                  | )        |                                                                          | (37,913   
|                                        | Proceeds on disposition of property                                               |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Patent costs                                                                      |                                                  |                                         | (54,588                                   | )        |                                                                          |          
|                                        | Organization costs                                                                |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Deposits                                                                          |                                                  |                                         | (21,462                                   | )        |                                                                          |          
|                                        | Officer advances, net                                                             |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Note receivable from officer                                                      |                                                  |                                         | (7,440                                    | )        |                                                                          |          
|                                        | Purchase of investment                                                            |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Purchase of license agreement                                                     |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Advances to Spectrum Diagnostics, Inc.                                            |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Prepaid securities issuance costs                                                 |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Purchase of Spectrum Diagnostics, Inc., net of cash and cash equivalents acquired |                                                  |                                         |                                          |          |                                                                          |          
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   |                                                  |                                         | Net cash used in investing activities     |          |                                                                          | (841,816  
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|Cash Flows From Financing Activities    |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        | Net proceeds from the sale of Series A Preferred Stock                            |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Net proceeds from the sale of Series B Preferred Stock                            |                                                  |                                         |                                          |          |                                                                          | 1,003,818 
|                                        | Net proceeds from the sale of Series C Preferred Stock                            |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Net proceeds from the sale of Series D Preferred Stock                            |                                                  |                                         | 5,555,139                                 |          |                                                                          |          
|                                        | Net proceeds from the sale of common stock and warrants                           |                                                  |                                         | 1,763,158                                 |          |                                                                          | 525,000   
|                                        | Net proceeds from the sale of common stock of subsidiary                          |                                                  |                                         | 125,000                                   |          |                                                                          | 4,000     
|                                        | Proceeds from debt obligations                                                    |                                                  |                                         |                                          |          |                                                                          | 25,000    
|                                        | Payments received on stock subscriptions receivable                               |                                                  |                                         |                                          |          |                                                                          |          
|                                        | Payments on debt obligations                                                      |                                                  |                                         | (777,336                                  | )        |                                                                          |          
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   |                                                  |                                         | Net cash provided by financing activities |          |                                                                          | 6,665,961 
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|Effect of Exchange Rate Changes on Cash |                                                                                   |                                                  |                                        |                                           |          |                                                                         |           
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        |                                                                                   |                                                  |                                         | Net increase in cash                      |          |                                                                          | 694,091   
|Cash and Cash Equivalents               |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        | Beginning                                                                         |                                                  |                                         | 1,328,797                                 |          |                                                                          | 436,223   
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           
|                                        | Ending                                                                            |                                                  | $                                       | 2,022,888                                 |          | $                                                                        | 244,165   
|                                        |                                                                                   |                                                  |                                         |                                           |          |                                                                          |           

11

---



QUANTECH LTD.    (A Development Stage Company)    NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. BASIS OF PRESENTATION

In the opinion of the management of Quantech, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal,
recurring adjustments) necessary to present fairly the financial position of Quantech as of December 31, 2000 and the results of operations and its cash flows for the three month and six month
periods ended December 31, 2000 and 1999, and the period from inception to December 31, 2000. The results of operations for any interim period are not necessarily indicative of the
results for the year. These interim financial statements should be read in conjunction with Quantech's annual financial statements and related notes in Quantech's Annual Report on
Form 10-KSB for the year ended June 30, 2000.

Note 2. LICENSE AGREEMENT

Quantech has a license agreement with Ares-Serono for certain patents, proprietary information and associated hardware related to Surface Plasmon
Resonance ("SPR") technology. The license calls for an ongoing royalty of 6 percent on all products utilizing the SPR technology which are sold by Quantech. In addition, if Quantech sublicenses
the technology, Quantech will pay a royalty of 15 percent of all revenues received by Quantech under any sublicense. To date, Quantech has paid $1,300,000 of cumulative royalty payments. This
amount satisfies the requirements of the license agreement until royalty accruals based on revenues exceed such minimum payment amount.

Note 3. CONVERTIBLE PREFERRED STOCK

On October 2, 2000, Quantech closed on a private equity offering greater than $5 million causing all of its Series A redeemable, B, C and
D preferred stock to automatically convert into common shares.

Note 4. HTS BIOSYSTEMS

Quantech's consolidated financial statements include the results of HTS Biosystems, Inc. ("HTS") of which Quantech currently has 72% ownership. HTS was
formed around a combination of SPR technologies and intellectual property from both Quantech and Applied Biosystems, Inc. (NYSE:ABI). This technology supports the accelerated development of
label-free, cost effective detection systems, initially for the scientific research market. HTS intends to become the definitive source of analytical systems and chemistry for the
high-speed detection of molecular and cellular interactions in the fields of functional genomics, proteomics and drug discovery. HTS expects its first product, the FLEX CHIP Kinetic
Analysis System, to be available this calendar year.

Note 5. BENEFICIAL CONVERSION FEATURE EXPENSE

Quantech's loss per share figure for the six months ended December 31, 2000 reflects $2,470,644 of non-cash beneficial conversion feature
charges resulting from sales of equity units consisting of four shares of convertible preferred stock and a warrant. A large number of such unregistered preferred shares were sold in a private
placement at a customary discount to the current market price of the common stock. For accounting purposes, the selling price of the equity unit was split between the shares and the warrant, with the
warrant value calculated using the Black-Scholes model and the remainder of the selling price assigned to the preferred shares. The resulting difference between the accounting value of the preferred
stock and the market price of the common stock created large

12

---

beneficial conversion feature charges. These charges were due to the nature of the equity sales and had no effect on net loss or cash flow.

Note 6. SEGMENTS

The Company has two reportable segments: Quantech Ltd. (Quantech) and HTS Biosystems, Inc. (HTS). Quantech is completing development of a system
for the hospital emergency department that is expected to run tests for a number of different medical conditions utilizing its proprietary technology, surface plasmon resonance (SPR). HTS is focused
on developing detection systems using SPR and other technologies for the functional genomics, proteomics and drug discovery markets. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies.

Three Months Ended December 31, 2000Quantech

HTS

TotalNet Sales

$
0

$
0

$
0Interest Income


39,392


12,528


51,920Interest Expense


4,754


0


4,754Depreciation and amortization


115,491


4,616


120,107Segment loss


(2,329,998
)

(817,553
)

(3,147,551
)Total assets

$
5,669,444

$
283,303

$
5,952,747


Six Months Ended December 31, 2000Quantech

HTS

TotalNet Sales

$
0

$
40,000

$
40,000Interest Income


47,500


33,369


80,869Interest Expense


23,980


0


23,980Depreciation and amortization


229,174


6,162


235,336Segment loss


(4,092,433
)

(1,124,933
)

(5,217,366
)Total assets

$
5,669,444

$
283,303

$
5,952,747


No
segment information is presented for the three months and six months ended December 31, 1999 as HTS did not begin operations until April 2000.

Note 7. REVENUE RECOGNITION

In December 1999, the staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101 (SAB No. 101), "Revenue
Recognition in Financial Statements." SAB No. 101 summarizes some of the staff's interpretations of the application of generally accepted accounting principles related to revenue recognition.
The Company adopted SAB No. 101 in the first quarter of the fiscal year ending June 30, 2001. The adoption of SAB No. 101 did not have an effect on the Company's financial
statements.

13

---



ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

History

Quantech Ltd. is a Minnesota company originally founded in 1991. Quantech is completing development of a system that is expected to run tests for a
number of different medical conditions. We call our system the FasTraQ. The FasTraQ consists of an instrument that sits on the top of a counter or cart and reads PrePaQ
disposable test cartridges developed by Quantech. Each Quantech PrePaQ test cartridge will contain a number of different medical tests such as those for a heart attack or pregnancy.
Hand-held communication devices called ReaLinQ communicators provide real time test results directly from the FasTraQ instrument to the medical staff members treating a
patient.

The
FasTraQ produces test results in a manner different than other testing systems because it uses Quantech's proprietary technology based on the quantum physics phenomenon known as
surface plasmon resonance ("SPR"), which involves the interaction of light with the electrons of metal. Quantech's technology creates SPR in a controlled environment which enables the FasTraQ to
detect and transmit information concerning the presence and quantity of certain native and foreign molecules in blood, urine or other fluids which may be associated with specific diseases or medical
conditions. SPR, along with other analytical methods, will allow the FasTraQ to provide the STAT tests required in the Emergency Department.

Excluding
tests that can be conducted in the home, the overall world wide diagnostic market is more than $20 billion. Routine and "STAT" (from the Latin statim meaning urgent)
laboratory tests currently account for the majority of this market. Routine tests required in the hospital are conducted on testing systems located in either the hospital's central laboratory or sent
to a laboratory that is not within the hospital. STAT tests are conducted by a hospital's central laboratory or a smaller, more conveniently located version of the central laboratories called STAT
labs. Obtaining test results from central laboratories can take a minimum of 45 minutes and up to three hours. This delay negatively affects patient treatment and increases costs. Although STAT labs
have been established to reduce the time delay, test costs are higher in STAT labs than central laboratories and turnaround time for tests is not always reduced. We are designing the FasTraQ to
address what we believe is a pressing need for a test system that can quickly, in less than 15 minutes, and cost effectively provide test results, especially for patients with critical problems in
emergency departments.

The
FasTraQ will be launched with at least a panel of three heart attack tests and a single test for pregnancy. Other tests are under development and are expected to be added to the
FasTraQ system to provide the number of different quantitative tests the emergency department requires on an urgent basis. We have received clearance from the U.S. Food and Drug Administration to
market for clinical use our tests for the cardiac enzymes Myoglobin and CK-MB and the pregnancy enzyme hCG.

Quantech
also owns 72% of HTS Biosystems, Inc. ("HTS"). HTS was formed around a combination of SPR technologies and intellectual property from both Quantech and Applied
Biosystems, Inc. (NYSE:ABI). This technology supports the accelerated development of label-free, cost effective detection systems, initially for the scientific research market. HTS
intends to become the definitive source of analytical systems and chemistry for the high-speed detection of molecular and cellular interactions in the fields of functional genomics,
proteomics and drug discovery. HTS expects its first product, the FLEX CHIP Kinetic Analysis System, to be available this year.

Quantech
is a development stage company which has suffered significant losses from operations, requires additional financing, and ultimately needs to complete development of its
product, generate revenues, and successfully attain profitable operations to realize the value of its license agreement. These factors raise substantial doubt about Quantech's ability to continue as a
going concern.

14

---

Results of Operations

Quantech has incurred a net loss of $33,587,083 from September 30, 1991 (date of inception) through December 31, 2000 due to expenses related to
formation and operation of Quantech's predecessor, Spectrum Diagnostics Inc. ("SDS") in Italy, continuing costs of raising capital, normal expenses of operating over an extended period of time,
funds applied to research and development, royalty payments related to the SPR technology, losses due to expenses of SDS and HTS and interest on borrowed funds. In addition, an investment of
$3,356,629 was made when Quantech purchased the exclusive rights to the SPR technology, and $1,300,000 of minimum royalties have been paid on the license.

Net
sales increased to $40,000 for the six months ended December 31, 2000 from $0 for the same period in 1999 due to the sale of an evaluation system. We expect additional
revenue from evaluation systems during the rest of the fiscal year, but do not expect significant revenue from the sale of commercial systems.

General
and administration expenses increased to $619,552 and $1,254,287 for the three months and six months ended December 31, 2000 from $433,354 and $765,507 for the same
periods in 1999 primarily due to expenses associated with financing activities, HTS start-up costs and spending related to company expansion. We expect general and administrative expenses
to increase in the future as Quantech and HTS complete development of their systems, prepare for market launch and begin to manufacture and distribute their products.

Marketing
expenses decreased to $278,643 and $475,796 for the three months and six months ended December 31, 2000 from $289,527 and $558,709 for the same periods in 1999 due to
lower market research expenses at Quantech. We expect marketing expenses to increase in the future as we prepare for market launch and begin to distribute our products.

Research
and development costs increased to $2,443,682 and $3,814,325 for the three months and six months ended December 31, 2000 from $639,763 and $1,231,217 for the same
periods in 1999 primarily due to the initial development work at HTS, and increased internal and outside development work at Quantech including expenses to prepare for clinical trials. We expect R&D
spending to significantly increase as Quantech and HTS complete the commercial development of their systems and begin to establish higher volume manufacturing capabilities.

Quantech
had no minimum royalty expense for the three months and six months ended December 31, 2000 compared to $37,500 and $75,000 for the same periods in 1999 due to the
final minimum royalty payment made in January 2000. In the future we expect to incur additional royalty expense when royalties based on revenues exceed minimum payments (see Notes to Financial
Statements, Note 2License Agreement).

Interest
income increased to $51,920 and $80,869 for the three months and six months ended December 31, 2000 compared to $427 and $1,810 for the same periods in 1999 as a
result of more cash on hand from the proceeds of offerings for Quantech and HTS Biosystems.

Interest
expense decreased to $4,754 and $23,980 for the three months and six months ended December 31, 2000 from $16,168 and $25,776 during the same periods in 1999 as a
result of lower debt. Interest expense is expected to be lower for the remainder of the fiscal year as Quantech does not anticipate any debt other than $125,000 of capital lease obligations.

Minority
interest in the HTS net loss increased to $147,160 and $230,153 for the three months and six months ended December 31, 2000 from $0 during the same periods in 1999
because HTS did not begin operations until April 2000.

15

---

For the three months and six months ended December 31, 2000 Quantech had losses of $3,147,551 and $5,217,366 as compared to $1,415,885 and $2,654,399 for the same periods in
1999. The higher losses were primarily due to higher operating expenses, especially for research and development.

Quantech's
earnings per share figure for the six months ended December 31, 2000 reflects $2,470,644 of non-cash beneficial conversion feature charges resulting from
equity sales of units consisting of four shares of convertible preferred stock and a warrant. A large number of such unregistered preferred shares were sold in a private placement at a customary
discount to the current market price of the common stock. For accounting purposes, the selling price of the equity unit was split between the shares and the warrant, with the warrant value calculated
using the Black-Scholes model and the remainder of the selling price assigned to the preferred shares. The resulting difference between the accounting value of the preferred stock and the market price
of the common stock created large beneficial conversion feature charges. These charges were due to the nature of the equity sales and had no effect on net loss or cash flow.

The
timetable for submitting additional tests to the FDA and introduction of Quantech's system to the market will be influenced by Quantech's ability to obtain further funding, enter
into strategic relationships, complete commercial prototype development of its system and develop further tests, and delays it may encounter with the FDA in its review of Quantech's tests and system.
There can be no assurance that Quantech will be able to obtain the required funding, enter into any strategic agreements or ultimately complete its commercial system.

Liquidity and Capital Resources

From inception to December 31, 2000, Quantech has raised approximately $31,400,000 through a combination of public stock sales, private stock sales and
debt obligations. In June 2000, Quantech began offering for sale units of its Series D convertible preferred stock to accredited investors. The units were priced at $10.00 per unit
consisting of 4 shares of Series D preferred stock and a warrant to purchase one share of common stock at an exercise price of $3.50 per share. Each share of Series D stock was
convertible into one share of common stock. During August through October 2000, Quantech raised net proceeds of $6,759,000 from the sale of 748,550 units. This offering triggered the conversion
of all of Quantech's preferred stock into common stock. After such conversion, Quantech sold units
priced at $10.00 per unit consisting of 4 shares of common stock and a warrant to purchase one share of common stock at an exercise price of $3.50 per share. During October through
December 2000, Quantech raised net proceeds of $638,000 from the sale of 71,000 units.

Quantech
anticipates that its cash on hand along with funds to be received from Mitsubishi Chemical Corporation for license and distribution rights in Japan will allow it to maintain
operations through March, 2001. Additional financing of approximately $15 million will be needed to develop and submit to the FDA additional tests, complete clinical evaluation of the system,
establish manufacturing capabilities and begin sales of the system. Quantech is currently reviewing multiple avenues of future funding including private sale of equity or debt with equity features or
arrangements with strategic partners. Quantech does not have any commitments for any such financing and there can be no assurance that Quantech will obtain additional capital when needed or that
additional capital will not have a dilutive effect on current stockholders. See "Cautionary StatementsWe expect to incur losses in the future and we need additional financing to achieve
sales necessary to reach a break-even cash flow." Quantech has terminated its limited lending arrangement with its bank and does not anticipate receiving any significant funding from
commercial lenders. In addition, HTS Biosystems anticipates raising up to $15 million for its operations either through strategic partners or the sale of securities. An equity sale would result
in a dilution of Quantech's ownership of HTS.

Quantech
incurred capital expenditures of $758,326 in the six month period ended December 31, 2000 primarily for automated production equipment and office systems and
equipment. We anticipate

16

---

significantly higher capital expenditures in the near future for laboratory and production equipment and office expansion as Quantech and HTS Biosystems near product introduction. The timing and
amount of such expenditures will be governed by our development and market introduction schedules, which are subject to change due to a number of factors including development delays, FDA approval and
availability of future financing.

As
of February 6, 2001 Quantech had 18,648,112 shares of common stock outstanding.

Cautionary Statements

Quantech wishes to caution investors that the following important factors, among others, in some cases have affected, and in the future could affect,
Quantech's actual results of operations and cause such results to differ materially from those anticipated in forward-looking statements regarding financing
needs, expenditures and other matters made in this document and elsewhere by or on behalf of Quantech.

We expect to incur losses in the future and we need additional financing to achieve sales necessary to reach a break-even cash flow.

We have incurred net losses in each year since inception. We expect to increase significantly our research and development, sales and marketing, manufacturing
and general and administrative expenses in the future. We will spend these amounts before we receive any incremental revenue from these efforts. Further financing will be necessary to complete our
menu of tests, establish sales and marketing and manufacturing capacity and achieve the sales level required to achieve a break-even cash flow. Additional financing through investment
capital, funding by strategic partner(s) or licensing revenues will be needed to operate until revenues can be generated in an amount sufficient to support operations. Quantech does not have any
commitments for any such additional financing and does not anticipate receiving any additional significant funding from commercial lenders until product sales commence. There can be no assurance that
any such additional financing can be obtained on favorable terms, if at all. Any additional equity financing may result in dilution to Quantech stockholders and could depress the market price of our
common stock.

"Going concern" statement in auditor's report may make it difficult to raise new capital.

Quantech has not had any significant revenues to date. As of June 30, 2000 and December 31, 2000, we had accumulated deficits of $31,900,252 and
$39,706,511 respectively. The report of the independent auditors on Quantech's financial statements for the year ended June 30, 2000, includes an explanatory paragraph relating to the
uncertainty of Quantech's ability to continue as a going concern, which may make it more difficult for Quantech to raise additional capital.

Development of the FasTraQ is not complete and may not be completed on the current timetable and budget.

Components of the FasTraQ system are under various stages of development. Until the FasTraQ development is completed and cleared through the FDA, there can be
no assurance that the FasTraQ system will be finished according to our current development timetable and budget. To date, Quantech has been unable to meet such timetable and budget. Failure to timely
finish on budget will require Quantech to seek funding greater than currently anticipated, thus intensifying the risks described in "We expect to incur losses in the future and we need additional
financing to achieve sales necessary to obtain break-even cash flow" above. Additionally, the final price that we will need to charge to cover
the costs of the FasTraQ instrument and the PrePaQ test cartridges cannot be determined until development is complete and FDA clearances have been obtained. If Quantech cannot receive FDA approval and
offer the FasTraQ system with certain required features and tests at a cost acceptable to

17

---

potential customers, it will be impossible for Quantech to continue operations. Failures in any of these areas will disappoint investors and could result in a decline in our stock price thus causing
investors to lose substantial money.

Other Factors

As described in Quantech's Form 10-KSB for the year ended June 30, 2000 under Cautionary Statements, there are factors concerning
Quantech in addition to those identified above that should be considered including, but not limited to: uncertainty of market acceptance of Quantech's product once introduced, inability or delay in
obtaining FDA product approval, competition, lack of marketing and manufacturing experience, technological obsolescence, ability to maintain patent protection on Quantech's technology and not violate
others' rights, effects of government regulation on Quantech's product and its sale, ability to manufacture its product, dependence on key personnel, exposure to the risk of product liability, risk of
loss of investment in HTS Biosystems and the limited market for Quantech shares.

PART II    OTHER INFORMATION

Item 1.Legal Proceedings



Item 2.Changes in Securities

During
October 2000, Quantech sold 249,550 units at $10.00 per unit (each unit consisting of 4 shares of Series D preferred stock and a warrant to purchase one share of
common stock at $3.50 per share) to accredited investors. Each share of Series D preferred stock was convertible into one share of common stock. The sale of such shares was deemed to be exempt
from registration under Section 4(2) of the 1933 Act and rule 506 promulgated thereunder. Quantech paid commissions and accountable expenses in the aggregate amount of $250,447 to
registered investment banks for acting as selling agents, and issued the investment banks warrants to purchase up to 99,820 shares of common stock as additional compensation. The purchasers acquired
these securities for their own accounts and not with a view to any distribution thereof to the public.

During
October 2000, Quantech issued 12,119,463 shares of common stock pursuant to conversion of preferred stock. The sale of such shares was deemed to be exempt from
registration under Section 3(a)(9) of the 1933 Act. The purchasers acquired these securities for their own accounts and not with a view to any distribution thereof to the public.

During
October through December 2000, Quantech sold 71,000 units at $10.00 per unit (each unit consisting of 4 shares of common stock and a warrant to purchase one share of
common stock at $3.50 per share) to accredited investors. The sale of such shares was deemed to be exempt from registration under Section 4(2) of the 1933 Act and rule 506 promulgated
thereunder. Quantech paid commissions and accountable expenses in the aggregate amount of $71,631 to a registered investment bank for acting as selling agent, and issued the investment bank a warrant
to purchase up to 28,400 shares of common stock as additional compensation. The purchasers acquired these securities for their own accounts and not with a view to any distribution thereof to the
public.

During
November 2000, Quantech issued 1,125 shares of common stock pursuant to the exercise of a warrant by an accredited investor. The sale of such shares was deemed to be
exempt from registration under Section 4(2) of the 1933 Act. The purchaser acquired these securities for his own account and not with a view to any distribution thereof to the public.

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Item 3.Defaults upon Senior Securities

Not
Applicable

Item 4.Submission of Matters to a Vote of Security Holders

The
Company held its annual meeting on December 5, 2000 in Minneapolis, Minnesota. The Company solicited proxies and filed a definitive proxy statement with the Securities and
Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended. The matters voted upon at the meeting and the votes cast were as follows:

No. 1Election of Mr. Richard W. Perkins as class 2 directorVotes
for10,626,088Votes Against0Votes
Withheld22,263
  

Election of Mr. Edward E. Strickland as class 2 directorVotes for10,625,758Votes
Against0Votes Withheld22,593
 
The terms of the following directors continued after the meeting: Robert Case, Robert W. Gaines and James F. Lyons.

Item 5.Other Information

Not
Applicable

Item 6.Exhibits and Reports on 8-K



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                        |  | QUANTECH LTD                                                                               
|----------------------- |  | -------------------------------------------------------------------------------------------
|                        |  | /s/ROBERT CASERobert Case Chief Executive Officer                                          
|Date: February 12, 2001 |  | /s/GREGORY G. FREITAGGregory G. Freitag Chief Operating Officer and
Chief Financial Officer

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